How it works:
The Robin Hood Tax is a tiny tax on banks, hedge funds and other finance institutions that would raise billions to tackle poverty and climate change, at home and abroad.
It can start as low as 0.005 per cent – and average 0.05 per cent . But when levied on the billions of pounds sloshing round the global finance system every day through transactions such as foreign exchange, derivatives trading and share deals, it can raise hundreds of billions of pounds every year.
And while international agreement is best, it can start right now, right here in the UK.
That can help stop cuts in crucial public services in the UK, and aid the fight against global poverty and climate change.
What is it?
We are calling for governments around the world to implement a tax on financial transactions – called the Robin Hood Tax.
It would tax the trade in financial assets such as stocks, bonds and foreign exchange, traded both physically and as derivatives (options, forwards, futures and swaps). It would cover both those bought and sold on Exchanges and those traded Over the Counter (OTC). While OTC trades are technically more difficult to capture, the long-term goal is for all financial transactions to be taxed.
Some of this needs international agreement, but some such as currency transactions can be taxed by individual countries. The UK already taxes share trades with a 0.5 per cent stamp duty. We say it should also tax sterling exchange at 0.005 per cent (5p for every £1,000 exchanged).
How much would it raise?
Up to $400 billion globally every year, with the rate of tax would vary from 0.5% on stocks to 0.005% on currency transactions. A tiny tax raises so much because of the sheer volume of transactions.
Why tax banks, hedge funds and financial institutions?
The financial sector has undergone runaway expansion in the last two decades. During that time, its activities have steadily become more divorced from the real economy of goods and services.
Globally it now turns over more than 60 times the size of world GDP every year. In the UK it has reached a staggering 446 times the size of our real economy. But risky trading practices played a major part in the financial crisis. (Schulmeister, 2009)
So it’s time for the people who caused this mess to pay to clean it up.
How will the money be spent?
The plan is for the US$400bn that could be generated by a global Robin Hood Tax to be split equally, with $200bn spent domestically and $200bn spent around the world.
Of the money spent globally, $100 billion would go towards international development and US$100 would support developing countries as they adapt to climate change.
For more info: http://robinhoodtax.org.uk